Housing slump takes shine off star-studded properties

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LOS ANGELES -- Cher is quietly trying to unload her gothic Pacific Coast Highway mansion in Malibu. Actor Nicolas Cage wants $35 million for his Bel-Air home, complete with screening room and Olympic-size pool.

But even in the land of $2 million "tear downs," housing prices are dropping faster than Jamie Foxx's Lamborghini.

"It's a buyer's market," said real estate agent Ben Young Mason, who works with upper echelon clients. "Houses which sold within 60 to 90 days last year are now sitting on the market for four to six months. Last year, 90 days was considered a long time."

Los Angeles is in the midst of a housing market slowdown, just a year after sellers were enjoying giddy times of bidding wars and multiple offers. Prices in Southern California rose in September at their slowest pace in nearly a decade. Realtors say there are several causes, but none more than greed.

"Houses appreciated 20 percent over a period of three to five years," Mr. Mason said. "Unfortunately, there's a discrepancy now between sellers' expectations and a realistic view of the market."

Real estate is the L.A. topic du jour, replacing who has a new development deal and whether Mel Gibson's career is kaput. Homes are simply worth less than they were a year ago, and many sellers are pulling their homes off the market.

"The problem is people are not reducing the prices. They're following a falling market. Sellers need to be realistic," Mr. Mason said.

Many properties in the real estate classifieds mention "celebrity owned" or "fit for a rock star."

The Oscar-winning Mr. Cage bought his seven-bedroom Bel-Air home -- once owned by pop singer Tom Jones -- in 1998 for $7 million. Although home values in his ZIP code have appreciated by 90 percent since then, according to DataQuick Information Systems, properties are sitting longer and longer on the market.

Even well-heeled foreigners are feeling the pinch. Saudi Prince Mohammed Al-Saud has listed his 12,000-square-foot home in Calabasas for $10.8 million, an asking price he is almost certain not to get.

Real estate listings are some of the most creative writing in print these days. For sale currently are star-studded properties promoted as "Custom built for Groucho Marx" (walk-in humidors?) and "Once the home of Clark Gable." Jesse Metcalfe, the hunky gardener on "Desperate Housewives," advertised his $1.6 million Sunset Strip home as "a sexy pad ... hip, earthy and a Zen masterpiece."

The housing market slowdown also has led to a sharp rise in mortgage defaults. Foreclosures among Californians more than doubled in the three months ending in September, according to DataQuick. Higher payments on adjustable rate mortgages are being blamed for the rise in loan defaults. Realtors admit that they were putting more people in homes they eventually would not be able to afford.

"In the inflated market, they paid top dollar," said real estate agent Alison Mitchell. "Now, they're in trouble."

Californians last experienced a severe housing slump in the 1990s.

Although selling a home is becoming more difficult, rentals are on the rise. In Los Angeles and Orange counties, the average rent rose 7.4 percent in the past quarter, and apartment owners say they have no trouble finding tenants. Buyers are in a "waiting mode."

Which leaves jittery Los Angeles homeowners with the question: Is it time to panic?

"Absolutely not, it's not time to panic," Mrs. Mitchell said. "All it has done is to return to a normal market as opposed to an exaggerated, overinflated market."